- Gold initially rallied during the trading session, but it has had some fairly lackluster action during the day as we attempt to sort out where to go next.
- I think at this point in time, we need to pay close attention to the $3,280 level because if we break down below there, we could lose another $80 pretty quickly.
- At that point, we would be threatening the $3200 level, an area that I’d be interested in, as it’s shown itself to be supported, and has the 50-day EMA currently hanging around it.
Furthermore, I would also take a look at the fact that historically speaking, it’s already acted as both support and resistance, and I think a certain amount of market memory is to be found there. On the other hand, if we turn around and break above the $3,370 level, I don’t see much to keep us from going to the all-time highs.
Don’t Forget the US Dollar
The US dollar has been strengthening a bit and that could be playing a little bit of havoc with gold, but we’ll have to wait and see. Bond markets of course continue to be a major problem for a lot of traders, and we’ll have to determine whether or not traders feel safe or if they are concerned about the global economy.
There has been a lot of damage done to the overall sentiment until recently due to the trade war. So, I think this remains a very noisy market. But when you look at it, the one thing that you cannot argue with is that there is a significant amount of momentum to the upside over the last several months. So, I’m still a bit leery of shorting this market, even though I can see that it’s possible that we draw from here. It’s really not until we break down below the $3,000 level that I look at this as a concerning situation. And even then, you probably have the 200 day EMA in that neighborhood as well. So again, I’m just looking for buying opportunities.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.